Ukrainian riot police charged protesters occupying a
central Kiev square early on Wednesday after the bloodiest day since the
former Soviet republic, caught in a geopolitical struggle between
Russia and the West, won its independence more than 22 years ago.

At
least 18 people, including seven policemen, died on Tuesday during
hours of violence between security forces and civilians who have staged
protests against President Viktor Yanukovich since last November.

Many
were killed by gunshot and hundreds more were injured, with dozens of
them in a serious condition, police and opposition representatives said.

The
riot police moved in hours after Moscow gave Ukraine $2 billion in aid
for its crippled economy which it had been holding back to demand
decisive action to crush the protests.

Nationwide
demonstrations erupted after Yanukovich bowed to Russian pressure and
pulled out of a planned far-reaching trade agreement with the European
Union, deciding instead to accept a Kremlin bailout for the heavily
indebted economy.

Europe’s top diplomats have been summoned to an
emergency meeting in Brussels today after EU leaders called for
sanctions against the Ukrainian government in response to a bloody
crackdown that killed more than two dozen people.

The
push for sanctions against Viktor Yanukovich, Ukraine’s president, and
his allies marks a significant shift for the EU, which has so far
insisted on a diplomatic response to the crisis. But it is not
guaranteed the unanimous support required by the 28-member bloc, amid
fears from some member states that a harder approach could push the
country closer to civil war.

A group led by France and
Poland will push for sanctions at an emergency meeting of foreign
ministers in Brussels. Although they are backed by Germany and the Czech
Republic, several countries – including Italy, the Netherlands and
Finland – are reluctant to move quickly. Spain prefers a diplomatic
solution rather than sanctions.

The Obama
administration said on Wednesday that it had placed 20 Ukrainian
officials on a visa blacklist as a result of the violence in Kiev on
Tuesday.

In the first sign of the EU’s economic
pressure coming to bear on Ukraine, the head of the EU’s investment bank
said that it had halted investments there. Werner Hoyer, president of
the European Investment Bank, said that he had suspended activities in
Ukraine, where the EIB has pledged to invest more than €1bn since 2011
in ventures such as a metro line and an air traffic control system.

The crisis in Ukraine appeared to be spinning out of
control on Wednesday, leaving the former Soviet republic facing its most
dangerous hour not just since independence in 1991 but for many
decades.

While anti-government protesters tore up
cobblestones along Khreshchatyk, Kiev’s main avenue, as weapons to
resist a second night-time assault by riot police, Donald Tusk, Polish
prime minister, warned that the world might be witnessing “the first
hours of a Ukrainian civil war”.

“There is no civil war
between the east and west of Ukraine,” said Olexiy Haran, a political
scientist and member of the protest co-ordinating committee. “There are
no people in the east of Ukraine who are going to die for Yanukovich.”

But
a civil war was under way, he added, between “the people of Ukraine,
and the Berkut [special police] and titushki” – the nickname for hired,
pro-regime thugs that authorities have used in Kiev and elsewhere to
beat up protesters.

With only about 4,000-5,000 Berkut
police, and perhaps 15,000-20,000 well-trained and equipped interior
ministry troops, analysts say the government would struggle to prevail
over widespread and determined opposition, especially in the west. But
plenty of blood could potentially be spilled along the way.

“This
week we realised it isn’t easy to resist when you’re not armed and you
are facing people who are using real bullets,” said Mr Haran.

Ukrainian President Viktor Yanukovich accused
pro-European opposition leaders on Wednesday of trying to seize power by
force after at least 26 people died in the worst violence since the
former Soviet republic gained independence.

The White
House urged Ukraine to pull back riot police, call a truce and talk to
the opposition. But the Ukrainian security services said they were
launching an "anti-terrorist operation" across the country after the
seizure of government buildings, arms and ammunition dumps by "extremist
groups".

Protesters have been occupying central Kiev
for almost three months since Yanukovich spurned a far-reaching trade
deal with the EU and accepted a $15-billion Russian bailout instead.

The
sprawling nation of 46 million, with an ailing economy and endemic
corruption, is the object of a geopolitical tug-of-war between Moscow
and the West. That struggle was played out in hand-to-hand fighting
through the night, lit by blazing barricades on Kiev's Independence
Square, or Maidan. As dusk fell on Wednesday, protesters braced for more
police action.

After a night of petrol bombs and
gunfire on Independence Square, black smoke billowed from a charred
trade union building that protest organizers had used as a headquarters.

When
fighting subsided at dawn, the square resembled a battle-zone, the
ground charred by Molotov cocktails. Helmeted young activists used
pickaxes, and elderly women their bare hands, to dig up paving to stock
as ammunition.

Amid a tense standoff in the central
Kiev square, thousands of protesters, many masked and in combat
fatigues, confronted police across makeshift barricades for a second
straight day.

Priests intoned prayers from a stage
while young protesters in hard-hats improvised forearm and knee pads to
protect themselves against baton blows. Others prepared petrol bombs.

"They
can come in their thousands but we will not give in. We simply don't
have anywhere to go. We will stay until victory and will hold the Maidan
until the end," said a 44-year-old from Ternopil who gave only his
first name of Volodymyr.

Ukraine has been rocked
periodically by political turmoil since independence from the Soviet
Union more than 22 years ago, but it has never experienced violence on
this scale.

The worsening violence in Ukraine is adding to the strains on emerging markets, as investors weigh the risks to neighbouring economies and the potential for a Ukrainian debt default to trigger a renewed sell-off in the assets of other countries.

The chaos unfolding in Kiev hit central and eastern European currencies on Wednesday, with Poland’s zloty falling 0.5 per cent to 4.1478 against the euro. Hungary’s forint, already under pressure from persistently dovish monetary policy, fell about 1 per cent to 227.43 against the dollar, while the Romanian leu slipped 0.6 per cent. Fears over Ukraine also exacerbated a sharp fall in Russia’s rouble.

Donald Tusk, Poland’s prime minister, urged the country’s parliament “to prepare Poland and Europe for the most dramatic possibilities”, in a speech that showed the degree of concern felt in the country most directly exposed to Ukraine’s turmoil.

“The implications for neighbouring countries should not be underestimated,” said Simon Quijano-Evans, head of emerging market research at Commerzbank,” noting that investors had previously underplayed the risks of unrest around the Arab world.

“A default could have a destabilising impact,” said Koon Chow, head of emerging markets strategy at Barclays Capital. Ukraine could only be a trigger for a return of gloom to emerging markets – but with emerging markets still fragile after the last month’s sell-off, and political crises deepening from Venezuela to Thailand, “we didn’t need much”.

On behalf of Mish readers globally, I send best wishes to the citizens of Ukraine.

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